Gene case a big win for biotech industry

The Federal Circuit’s decision was a tremendous victory for the biotech industry. Or so it seemed.

The court on Aug. 16 held that human DNA can be patented. The 2-1 ruling in Association For Molecular Pathology v. U.S. Patent and Trademark Office reaffirmed the panel’s prior decision in the case and rejected again the contention that human DNA is an unpatentable product of nature.

The ruling was a defeat for many researchers, physicians and patients who wanted more freedom to create and use gene-based therapies and diagnostic procedures. But the Federal Circuit’s decision was a huge relief for the biotech sector, which has obtained more than 40,000 DNA-related patents in the past 30 years. “It validated basic protection for biotech inventions,” says Gerald Flattmann Jr., a partner at Paul Hastings.

This legal protection is essential if the industry is to flourish, according to many experts. “Patent protection is crucial to maintaining investment in [biotech] R&D,” says Gregory Castanias, a partner at Jones Day. Castanias represents the patentee in this case.

However, patent protection for human DNA may be on shaky ground. The Federal Circuit panel issued three divergent opinions in this case. Each judge adopted a different position on which types of DNA can be patented and why.

This fractured decision is unlikely to be the last word on the matter. The losing party has asked the Supreme Court to hear this case, and the court will probably grant the cert petition. “The stakes are huge, the legal questions are interesting, and there are many amici pushing for the court to take the case,” says Jake Holdreith, a partner at Robins, Kaplan, Miller & Ciresi.

Mayo Schmayo

This case has already gone up to the Supreme Court once. In March 2012, the high court granted cert, vacated the Federal Circuit’s 2011 ruling upholding the patentability of human DNA and ordered the Federal Circuit to reconsider the case in light of Mayo Collaborative Services v. Prometheus, Inc., a ruling the Supreme Court issued just days before.

On remand, the Federal Circuit seemed to do little reconsidering. “The Federal Circuit basically reissued the same decision,” says Christopher Hansen, senior national staff counsel for the American Civil Liberties Union. Hansen represents the parties challenging the patentability of human DNA.

Federal Circuit Judge Alan Lourie held that Mayo did not apply to the main issue in this case: the patent-eligibility of DNA. In Mayo, a unanimous Supreme Court held that a process was not patent-eligible because it essentially claimed a monopoly over a law of nature. That ruling about the patent-eligibility of a process “does not control the question of patent-eligibility” of “compositions of matter” such as DNA molecules, Judge Lourie stated.

“Judge Lourie said Mayo was irrelevant,” says Prof. Arti Rai of Duke Law School. “He said the Supreme Court’s suspicion that Mayo had something to say about this case was wrong.”

Judge Lourie, who wrote the Federal Circuit’s opinion on remand, agreed that substances found in nature are not patent-eligible. But if a substance has “markedly different” characteristics from those found in nature, it is patent-eligible, he held.

Isolated human genes and gene fragments are only small sections of naturally occurring chromosomes, and the ends of isolated DNA molecules differ from their counterparts on longer-chained chromosomes. Thus, isolated DNA molecules are markedly different in structure from naturally occurring chromosomes—and are patent-eligible, Judge Lourie concluded.

Different Opinion

Federal Circuit Judge William Bryson analyzed the case very differently. In his opinion that concurred in part and dissented in part, Judge Bryson held that patent eligibility of a product was determined by “(1) the similarity in structure between what is claimed and what is found in nature and (2) the similarity in utility between what is claimed and what is found in nature.”

Mayo was “instructive” in applying this test, Judge Bryson stated. Mayo holds that a process can be patent-eligible only if it does more than apply a law of nature; the process must involve some significant “inventive concept.” Similarly, according to Judge Bryson, a product can be patent-eligible only if it is created by “an inventive concept that involves more than merely incidental changes to [a] naturally occurring product.”

The isolated genes at issue here were produced by applying well-known, conventional technology to naturally occurring chromosomes. There was nothing inventive, Judge Bryson stated.

The process of isolating genes produced a chemical change, adding new terminal groups at the ends of the isolated DNA strands. But according to Judge Bryson, this change was incidental and unimportant. The new terminal groups weren’t even claimed in the patent at issue. The patent claimed only the identical nucleotide sequences that are found in nature. Thus, isolating the genes did not modify their structure in a way that added new utility, Judge Bryson concluded.

He also held snippets of genes are unpatentable, but for a different reason. A patent on these snippets would cover “portions of the DNA of nearly all human genes,” even though the patent “has contributed nothing to human understanding of other genes.” Such a patent would run afoul of Mayo’s warning against overly broad patent claims that might “foreclose more future invention than the underlying discovery could reasonably justify.”

Moore Analysis

Federal Circuit Judge Kimberly Moore reached the same results as Judge Lourie, even though her analysis was very similar to that of Judge Bryson. Like Judge Bryson, she found Mayo to be “instructive.” The idea that Mayo applied only to methods was “untenable,” she wrote.

To determine patent eligibility, Judge Moore applied a two-part test similar to Judge Bryson’s: In order to be patent-eligible, a substance must possess “markedly different characteristics” from that found in nature and must provide some significant new use.

Snippets of genes meet this test, according to Judge Moore, because they have markedly different properties than natural DNA and provide important new uses. For instance, the snippets can be used as primers in diagnostic screenings to detect gene mutations, whereas naturally occurring DNA cannot.

Longer isolated DNA strands, that cover most or all of a gene, are another story. Such isolated genes are structurally and chemically different than genes on chromosomes, but these differences do not increase their utility, Judge Moore found. Isolated genes thus seem not to be patent-eligible. However, such a ruling would upset the “settled expectations of the biotechnology industry—not to mention the thousands of issued [DNA-related] patents,” Judge Moore wrote. So she upheld the patent eligibility of isolated genes.

Such judicial deference is hardly novel. When making rulings, judges often prefer to avoid upending private parties’ long-settled expectations. But if this case reaches the Supreme Court, the justices may be less willing to give such deference here, some experts say.

“The Supreme Court is sensitive to this [issue], but it is not dispositive,” Rai says. She adds, “Mayo didn’t talk about that at all, even though the decision could be seen as upsetting settled expectations.”

Pickets and PR

With the patentability of DNA far from settled, what are biotech firms and their legal counsel supposed to do? “You need a picket fence of patent protection,” says Jake Holdreith, a partner at Robins, Kaplan, Miller & Ciresi. “You want to patent lab methods, isolated DNA and cDNA [man-made DNA containing only nucleotide sequences that code for proteins]. You don’t want to rely on any single plank.”

Biotech firms also need to fight a larger battle to win over public opinion. “Biotech companies should get out their side of the story—that research is expensive and they need to recover their costs,” Holdreith says. “They need to make clear they are doing the hard work of inventing usable tools, but they can’t continue unless their inventions are patentable.”